CIO Revitalizes IT Department
and Reverses Outsourcing Trend

Aspen Publishers   IT Healthcare Strategist

 

The IT department was almost extinct by the time the new vice president of information technology arrived at Blue Cross Blue Shield of Maryland in 1995. The company was outsourcing all its IT work to cut costs after being publicly rebuked for excess spending. Of the 285 employees required for the IT department, 60 IT jobs were vacant. The remaining staff had been given notice that they soon would be working for a consulting company. And the company hadn't had a vice president of IT for 18 months. Morale? Worse than you can imagine.

Enter Charles Bradbury, a troubleshooting IT sheriff, who in three years reversed the outsourcing trend and filled 42 of the 60 IT openings with virtually no turnover. Recruiting and retaining IT staff was critical to the nonprofit corporation's new five-year, $70 million IT strategic plan, Bradbury says. The plan called for creating information systems for managed care administration, sales and marketing, underwriting, medical management, finances, information management, infrastructure development, and IT effectiveness, he says.

The plan, in turn, showed potential employees that the company understood and valued IT professionals, he says. However, his early recruiting efforts were hindered by the company's reputation for outsourcing, he comments. Bradbury conducted a benchmark study that showed in-house staff clearly cost less than hiring consultants. Using in-house IT staff, "we also had better control, better timing, increased business knowledge, and continuity," Bradbury says. Since he arrived, BCBS Maryland has doubled its revenues of $2 billion and the size of its IT staff by merging with the National Capitol Area Blue Cross plan.

When the executive steering committee - the CEO and the vice presidents - discovered they were too short-staffed to activate the grand plan, it turned to the human resources department and barked "Fix it!" The backing of high level executives was paramount, Bradbury says. For one thing, it helped Bradbury overcome the human resource department's resistance to the salary increases and other financial incentives necessary to attract IT professionals.

You need to provide financial incentives. If you don't pay them [IT staff] on the front end, you'll pay later in terms of turnover and vacancies," Bradbury says. Among the corporation's techniques to maximize recruiting and minimize turnover, it:

Blue Cross also outsourced the less interesting work such as parts of the Y2K conversion and legacy system, he says. The company also contracts with Ernst & Young as its IT strategic business advisor.

Developing talented IT staff within the company has been the cornerstone of the strategic plan, says Bradbury, adding that total outsourcing is not in the best interest of most companies.

"Any one of these [recruiting and retention] techniques would not be successful by itself", Bradbury says. "In combination, they have changed the atmosphere at Blue Cross. People want to join us rather than leave."

Aspen Publishers, IT Health Care Strategist.